Global Market Updates
• A hawkish tone from Fed’s officials has caused yield on US Treasury notes to increase on the first trading day of this week (May 15, 2023).
• The short term bond of 2-year benchmark yield increased 2 bps and finally hit 4.00% psychological level again, whereas the 10-year benchmark rose by 4 bps to 3.51% on Monday (May 15, 2023).
• Despite yield on the government bonds increased, US stock market still recorded a positive performance starting this week.
• The DJI came up higher after appreciating by 0.14%. Meanwhile the S&P 500 and NDX each rose 0.30% and 0.66%.
• On the recent comment, Fed’s President of Atlanta Raphael Bostic said that interest rate cuts this year seems to be unlikely given inflation remain too high to ease the monetary policy even if with the risk of economic recession.
• In the Euro Area, industrial production data showed an unexpected contraction in Mar-23. Industrial production fell 4.1% MoM deeper than the expectation of 2.5% MoM contraction.
Domestic Market Updates
• The benchmark LCY government bond price traded mixed on May 15, 2023 with the 10-year yield increased by 3 bps to 6.41%.
• Besides that, other benchmark particularly on the shorter-term also experienced a yield increase.
• The IDR depreciated against other major currency and falling 0.37% against USD to IDR14,805/USD yesterday, albeit stabilizing CDS.
• Statistics Indonesia reported domestic trade balance recorded a surplus of USD3.94bn in Apr-23, beating consensus estimate of USD3.33bn.
• Trade balance surplus continued for 36 consecutive months. The Apr-23 surplus was driven by deeper imports contraction than exports decline on the back of Eid Fitr momentum amidst softening commodity prices.
Market Forecast
• Given the recent development on global and domestic market, we expect the 10 year Indo GB yield to move within a range of 6.35-6.45% for today.
• Attractive Indo GB series to be traded today : FR0046, FR0070, FR0077, FR0084, FR0086, FR0091, FR0088, FR0050.
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